Today I want to look at technical analysis of precious metals and other commodities.

Technical analysis of crude oil, October 1, 2017

This is a weekly chart of crude oil:

Figure 1. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is heading up towards the descending trend line and right now it sits just at it. From now on it will be interesting to see where prices will be going, if they go up or down. If they go up they could rise fast, but my hunch is that they will go down from here.

Technical analysis of gold, September 23, 2017

This is a weekly chart of gold:

Figure 1. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart broke out of a descending trend line a few weeks back. Now it has hit the trend line again, but from the upside this time. We have to wait and see what happens on Monday morning, but normally I would consider this chart pattern being a buying opportunity.

Technical analysis of crude oil, September 14, 2017

This is a weekly chart of crude oil:

Figure 3. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is caught between two opposing trends: One descending trend line above and one lateral trend line below. Prices are now pushing up agains a rising 50-week moving average which makes a break-through likely.

The bullish scenario:

In this scenario prices go through both the 50-week moving average as well as the descending trend line above.

This scenario is fairly likely. I would give it a probability of 70 per cent.

The bullish/bearish scenario:

In this scenario prices falter at either the 50-week moving average or the the descending trend line. Given the chart pattern I don’t believe it being very likely. I would give it a probability of 15 per cent.

The bearish scenario:

This is where prices go south from here. I would also give such a scenario a probability of 15 per cent.

Technical analysis of gold, September 9, 2017

This is what a gold chart looks like:

Figure 2. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

We have a breakout!

Now there is nothing holding gold back and all the resistance is gone.

But would I be buyer at this stage?

Probably not. I would prefer to wait for a pull-back down at the descending trend line.

But essentially this is good news if you are bullish on gold.

Technical analysis of crude oil, September 3, 2017

This is what a chart of crude oil looks like:

Figure 3. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

We are still caught between the 50-week moving average and the 100-week. It looks as though the chart hasn’t really decided for which trend to follow.

The bullish case:

In this scenario prices bouncing off the 100-week MA and continue up through the 50-week and the descending trend line.

The bearish case:

In this scenario prices are falling through the 100-week MA and continue through the lateral trend line that is drawn in Figure 1.

I would give both these scenarios a probability of 50 percent at this stage.

Technical analysis of gold, August 24, 2017

This is what a chart of gold looks like:

Figure 4. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is squeezed between two opposing trends. The 100-week moving average is acting as support.

The bearish scenario:

In the bearish scenario prices falling down from here and then go through the rising 100-week moving average. I would give such a scenario a probability of 10 per cent.

The bearish/bullish scenario:

In this scenario prices are falling down to the 100-week moving average, but then they rebound and go higher. I would give such a scenario a probability of 30 per cent.

The bullish scenario:

In this scenario prices go through the descending trend line that is acting as resistance in the chart. I would give such a scenario a probability of 60 per cent.

Technical analysis of crude oil, August 17, 2017

This is what a chart of crude oil looks like:

Figure 3. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

Looking at the chart it becomes clearer to me that it is in a head-and-shoulders-pattern. The chart looks heavy.

The bullish scenario:

In the bullish scenario prices find their footing at the 100-week moving average and then move higher. Given the current chart pattern I would give such a scenario a probability of 15 per cent.

The bearish scenario:

In the bearish scenario prices along their current path and go lower. That means that they will penetrate through the 100-week moving average without any resistance. Given the chart pattern, I would give such a scenario a high probability of 85 per cent.

Technical analysis of crude oil, August 5, 2017

This is a weekly chart of crude oil:

Figure 4. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is getting squeezed between one supporting trend line (below) and another putting pressure on prices (above). Furthermore, there may be head-and-shoulders pattern building up in the chart.

The bullish scenario:

In the bullish scenario prices are supported by the 50-week moving average and move up through the descending trend line.

At this point I would put a ten per cent probability on that happening.

The bullish/bearish scenario:

This scenario is where prices move up and kiss the descending trend line but then move down.

I would give such a scenario a probability of ten per cent.

The bearish/bullish scenario:

This is where prices simply fall down and plunge through both the 50-week and the 100-week moving average. When prices finally hit the horizontal trend line then they rebound and continue within the trading range.

I would give such a scenario a probability of 75 per cent.

The bearish scenario:

In this scenario prices are simply plunging through both moving averages and then also the lateral trend line in the chart.

I would give such a scenario a low probability of 5 per cent.

Technical analysis of gold, July 31, 2017

As usual, this is a weekly chart of gold:

Figure 2. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is caught in a pennant like pattern with prices edging up against a declining trend line.

Prices are further lifted by the rising 100-week moving average (dotted turquoise line).

The bearish scenario:

In this scenario prices rediscover gravity and fall down from here.

That happens despite the rising 100-week moving average.

Because this is not very likely I give it a probability of 15 percent.

The bullish scenario:

In this scenario prices are moving up and through the declining trend line.

This is a likely scenario given the current chart pattern. I would give it a probability of 40 per cent.

The bullish/bearish scenario:

In this scenario prices move up and touch the declining trend line, but then fall down.

This is also a likely scenario and I would give it a probability of 45 per cent.

Technical analysis of gold, July 24, 2017

This is a weekly chart of gold:

Figure 3. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is in a classic pennant where it is pushing up on the descending trend line above.

The bullish scenario:

In this scenario prices go up from here, but they don’t stop at the upper trend line but continue through.

I would give such a scenario a probability of 50 per cent.

The bullish/bearish scenario:

This scenario is very similar to the one above.

The only difference is that prices stop at the declining trend line and continue down.

I would give such a scenario a probability of 40 per cent.

The bearish scenario

In the bearish scenario prices are rediscovering gravity and go down from here.

Because it is not very likely I give it a probability of 10 per cent.

Technical analysis of crude oil, July 19, 2017

This is a weekly chart of crude oil:

Figure 4. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is extending its right shoulder in a head-and-shoulders pattern. The chart looks heavy and I believe it will go lower from here.

The bullish scenario:

In the bullish scenario prices defy gravity and go up from here. I would give this a low probability of 5 per cent.

The bearish scenario:

In the bearish scenario prices go down from here. Given that the chart looks heavy I would give this a high probability: 95 per cent.

Conclusion:

The chart looks poised to go lower with a head-and-shoulders pattern developing.

Technical analysis of crude oil, July 13, 2017

Figure 4. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart looks heavy with a left shoulder, a head and a right shoulder. This is usually a sign of the chart going lower from here.

Furthermore, prices are being pushed down by the 100-week moving average.

The bullish scenario:

In the bullish scenario prices defy gravity and edge higher from here.

I would give this a probability of 15 per cent.

The bearish scenario:

In this scenario prices are indeed being pushed down by the 100-week moving average.

Given the current shape of the chart, I would give this a probability of 85 per cent.

Conclusion:

My reading of the crude oil chart is that it is likely to go lower from here.

Technical analysis of gold, July 6, 2017

This is a weekly chart of gold:

Figure 5. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is caught between a descending trend line and a rising 100-week moving average.

The bullish scenario:

In this scenario prices are pushing up against the descending trend line and then through it.

Given the chart pattern I give this a probability of 65 per cent.

The bullish/bearish scenario:

Here prices are advancing up but then they go down at the trend line.

I would give this scenario a probability of 20 per cent.

The bearish scenario:

In this scenario prices are inexplicably going down from here.

I would give this a probability of 5 per cent.

The bearish/bullish scenario:

Here prices fall just like above, but when they reach the ascending trend line they change direction and head up.

I would give this a probability of 10 per cent.

Technical analysis of crude oil, July 1, 2017

This is a weekly chart of crude:

Figure 3. Weekly chart of crude oil (XOIL.X) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is getting squeezed between two opposing trend lines. The one above is descending while the one below is lateral.

If we wait a couple of weeks we may see head-and-shoulders pattern forming.

The bullish scenario:

In the bullish scenario prices continue on their upward path that began this week (I didn’t believe that it would).

I would give such a scenario a low probability of 10 per cent.

The bearish scenario:

In this scenario prices are being pushed down the 100-week moving average.

I would give such a scenario a high a probability: 90 per cent.

Conclusion:

The chart looks bearish. We’ve tested the lateral trend line several times the past six months and in my opinion it will fall. The question is how deep.

Technical analysis of gold, June 26, 2017

This is what a weekly chart of gold looks like:

Figure 4. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description of chart:

Prices are now sitting on a declining 50-week moving average. If they go up from here they will face overhead resistance in the form of a descending trend line and if they fall they are likely to be caught by the ascending 100-week moving average below.

The bullish scenario:

In this scenario prices are being saved by the 50-week moving average that will act as support. After that they will then continue through the descending trend line.

This is an unlikely scenario because of the nature of the chart pattern.

I would only give this scenario a probability of 10 per cent.

The bullish/bearish scenario:

This scenario is as the one above with the difference that prices stop at the descending trend line and go down from there.

I give that scenario a probability of 30 per cent.

The bearish scenario:

In this scenario prices go down all the way through the 100-week moving average and the ascending trend line.

This is unlikely to happen but nevertheless I give it a probability of 5 per cent.

The bearish/bullish scenario:

In this scenario prices first fall but are then caught either by the ascending 100-week moving average or the ascending trend line below in the chart.

I would give such a scenario a probability of 55 per cent.

Technical analysis of crude oil, June 21, 2017

This is a weekly chart of crude oil:

Figure 5. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart has been in a pennant until a few weeks ago. Now all the resistance in the chart is gone.

The bullish scenario:

In this scenario prices neglect gravity and head up from here without sensing any downward pressure.

While this scenario is not impossible, I don’t consider it likely.

I would give such a scenario a probability of 1 per cent.

The bearish scenario:

In this scenario prices go down because there is no resistance left in the chart.

At this juncture this is the likely scenario.

I would give such a scenario a probability of 99 per cent.

Conclusion:

It seems likely that we are going to fill up our cars cheaply this summer.

Technical analysis of gold, June 19, 2017

This is a weekly chart of gold:

Figure 6. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Description:

The chart is in a pennant, currently on its way down, and once it breaks out of the resistance or the support, the move will be violent.

The bullish scenario:

In this scenario prices head up from here and break out of the resistance that is weighing on the upside.

Its not an unlikely scenario, but I would only give it a probability of 20 per cent.

The bearish scenario:

In this scenario prices go down from here. This is the more likely scenario given how prices have moved lately.

I would give such a scenario a probability of 80 per cent.

Conclusion:

In the short-term prices are likely to continue down, but in the medium-term it looks as though they are moving up. The reason why I say this is because prices have been knocking on the upper resistance zone at least twice recently. It would surprise me if they did not succeed to go through at some point.

Technical analysis of gold, June 12, 2017

This is what a weekly chart of gold looks like:

Figure 7. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

Prices sit just at the descending trend line and depending upon where they move from here will determine their movement for a long time.

The bullish scenario

In this scenario prices are slowly edging their way through the descending trend line.

If the resistance is gone prices have no immediate thing stopping them from much higher.

In favor of this is the fact that we are above both the 50-week and the 100-week moving averages.

Given the lower high made in February, I’d still give such a scenario a probability of 40 per cent.

The bearish scenario

In this scenario prices are headed lower from here.

The arguments for lower prices are the same as above.

I would give such a scenario a probability of 60 per cent.

Technical analysis of crude oil, June 09, 2017

This is a weekly chart of crude oil:

Figure 8. Daily chart of the crude oil index (XOIL.X). 50-day moving average is in blue and 100-day is in turquoise. Ascending and descending straight trend line are in white. Chart: FreeStockCharts.com

Summary:

Prices have now come down again and are now pushing against the ascending trend in the Figure 1.

The bearish scenario:

I will begin with the bearish scenario. This is where prices fall down through the ascending trend line and then continue down. At this point I would give such a scenario a probability of 65 per cent.

The bearish/bullish scenario:

In this scenario prices first go down but then rebound once they hit the trend line below. This is not implausible and I give such a scenario a probability of 30 per cent.

The bullish scenario

This is where prices shoot straight up from here. Given recent trends I don’t consider it very likely and I would give it a probability of 5 per cent.

Technical analysis of gold, June 05, 2017

This is what a weekly chart of gold looks like:

Figure 9. Weekly chart of Gold (XGLD) from the end of 2015 until now. 50-week moving average in blue and 100-week moving average in turquoise. Ascending and descending trend lines are in white. Chart: FreeStockCharts.com

What we are seeing is that prices are coming up towards the descending trend line.

The bullish scenario

In this scenario prices are going through the declining trend line and then continue up beyond.

Given that the 100-week moving average is slightly ascending, I would give such a scenario a probability of 70 per cent.

The bearish scenario

In this scenario prices are going down from here.

While a distinct possibility, I only give such a scenario a probability of 30 per cent.

If you want to learn the basics of technical analysis you can do that here.